View full sizeimage courtesy city of AllentownA rendering of the plans for the Allentown hockey arena block.

Just two weeks after making its first settlement proposal in the hopes of stopping a lawsuit against the planned hockey arena, the city of Allentown is upping its offer.

The city now proposes that developers within the arena zone pay a fee to help offset the earned income taxes local municipalities and school districts would lose to the hockey arena development.

Allentown officials propose that developers with commercial office projects using NIZ proceeds pay an annual fee of $1 per square foot, according to a two-page settlement offer obtained by The Express-Times.

Those
fees would create a development fund that would distribute money to the
affected municipalities and school districts as future development
opportunities arise, according to the document.

Money from the
fund would be distributed based on the percentage of EIT collected from
residents within those taxing bodies, which is expected to be calculated
by mid-June, according to the offer.

Allentown Mayor Ed Pawlowski did not respond to an inquiry for comment, and city spokesman Mike Moore has declined to discuss ongoing settlement discussions.

The boards of supervisors for both Hanover and Bethlehem townships have
reviewed the settlement offer in closed-door meetings this week.
Representatives from both boards have declined to discuss it.

Eleven
municipalities were listed as plaintiffs in the lawsuit as of Friday,
according to court records, and others who are not yet listed have
previously voted to join the suit.

As a term of the proposed
settlement, all taxing bodies would withdraw from the lawsuit and any
agreement reached would apply to all of them, according to the offer.

Allentown officials have been attempting to settle the lawsuit quickly so it will not further delay construction of the arena, which is slated to be finished in September 2013 in time for the Phantoms hockey season.

View full sizeExpress-Times File Photo | BILL ADAMSThe future site of the planned Allentown hockey arena, as seen from the north side of the 700 block of Hamilton Street.

Additionally, a number of local developers have been holding meetings to discuss their concerns about the NIZ and the possibility of filing their own lawsuit to challenge it.

The developers fear that tenants in their own office buildings could jump ship to rent space in the NIZ, where those developers can offer more competitive lease rates due to their tax subsidies.

Developer J.B. Reilly, who has proposed $500 million in long-term development over a 10-year span, met with those developers Thursday in an attempt to ease those concerns.

Stephen Thode, a Lehigh University professor of finance and spokesman for the developers, said they have requested that an economic impact study of the tax zone be conducted.

They have also expressed a desire to shrink the 130-acre zone so it would be more limited to the downtown arena area itself. The current zone includes about 40 acres around the arena and 80 acres at the Allentown waterfront.

"The sense I got from speaking to several people was if it is limited to the downtown area, and had defined boundaries, and wasn't 130 acres but something less than that, there was a sense that they could probably live with that," Thode said.

The developers are also looking into forming a collective organization, Thode said, which would protect the individual developers from personal liability if they do sue.

In a routine maneuver for such lawsuits, attorneys representing Gov. Tom Corbett -- who is listed as a defendant -- requested and were granted a 30-day extension to respond to the lawsuit.

On Thursday, Salisbury Township commissioners voted 5-0 against joining the lawsuit, and instead voiced strong support for the arena project as a whole.

Salisbury Township Commissioner Debra Brinton said she believes Pawlowski and the city are acting in good faith and expressed confidence they would quickly receive back all their EIT from before the NIZ took effect.

"We believe this will help improve Allentown, which will help improve Salisbury, and we're being a good neighbor," Brinton said. "I think that they have everybody's best interests at heart, and we all felt that way."